Samsung's chip business shows signs of recovery in Q3

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Samsung's chip business shows signs of recovery in Q3

Published: 31 Oct. 2023, 09:26 Updated: 31 Oct. 2023, 16:07

JIN EUN-SOO
jin.eunsoo@joongang.co.kr

Samsung Electronics' headquarters in Seocho [NEWS1]

Samsung Electronics narrowed its chip deficit by 600 billion won ($443.9 million) in the third quarter, showing signs of bottoming out after a long market downturn.

The Korean electronics giant announced its third quarter earnings Wednesday, posting 2.43 trillion won in operating profit, a 77.6 percent drop from a year ago. Its revenue logged 67.4 trillion won, a 12.2 percent year-on-year drop.

Its device solutions (DS) division, in charge of the chip business, logged 3.8 trillion won in operating loss during the July-September period, showing a recovery compared to the previous quarter's 4.3 trillion won loss. Its revenue came to 16.4 trillion won, 12 percent more than the previous quarter.

Samsung Electronics attributed the upturn of its chip business, which has long remained sluggish due to the global chip glut, to rising demand for high-performance memory semiconductors derived from the latest AI hype.

“Expanded sales of high-value memory chips such as HBM, DDR5 and LPDDR5x and an increase in price for some of the products lead to a smaller deficit compared to the previous quarter,” Samsung Electronics said Tuesday in a release.

“We have received multiple purchase inquiries from clients about securing inventory as the industry is bottoming out.”

Samsung Electronics said it will increase its HBM supply by more than 2.5 times next year.

“We plan to increase the HBM supply capacity by more than 2.5 times next year,” said Kim Jae-june, executive vice president of Samsung Electronics' memory chip business during the conference call.

“We have already completed supply contracts with our major clients for next year.”

HBM3, an advanced type of DRAM memory chip, considered essential for running high-performance AI systems, will get a sales boost as well.

“Sales of HBM3 in the first half of next year will account for more than half of our entire HBM sales,” Park said.

The 24-gigabyte HBM3E will start mass production in the first half of next year while the 36-gigabyte version will ship out samples in the first quarter of next year.

Its Device eXperience (DX) division in charge of mobile and TV businesses logged 44 trillion won in revenue which is a 7 percent year-on-year drop. Its operating profit posted 3.7 trillion won, a 5.6 percent on year jump.

Its mobile business, in particular, showed solid growth by posting 3.3 trillion won in operating profit, backed by sales of new foldables, the Galaxy Z Flip and Z Fold which launched in July.

Samsung Display, the display panel-making arm 84 percent owned by Samsung Electronics, continued to post a robust performance with its revenue coming in at 8.2 trillion won and operating profit at 1.9 trillion won.

The company is due to spend a total of 53.7 trillion won in capital expenditure this year, including 47.5 trillion won in the DS division.

“We maintain the policy of making investments as we closely monitor the supply-demand situation,” the company said.

“We are also actively investing in advanced technology such as securing a top-notch HBM production capacity.”

Samsung Electronics shares rose by more than 1 percent during the morning session. It closed at 66,900 won Tuesday, 0.59 percent lower than the previous trading day.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]